Oil versus Yen

The rally since 2-2 may come to an end at least in the short term. Largely on the energy (pardon the pun) of a robust economy the Loonie has been rallying against the unsuccessful “Abenomics” strategy that keeps Japan stuck going nowhere.

Price consolidated from 3-5 to 4-14 and since the 15th has moved aggressively peaking at about 100. With the Japanese candlestick pattern “spinning top” on 5-5 and again on 5-13 price looks indecisive and a “double top” pattern has formed (albeit imperfect).

This price level providing resistance recently provided support 12-16 of 2014 when price dipped and rebounded sharply. With the price of oil now back under $60 perhaps traders believe this currency needs to pause before resuming an uptrend.

The resumption of an uptrend seems likely since the BOJ is more likely to attempt weakening the currency than let it appreciate and while oil is at the top end of its range now it will continue to be in demand for some time. There is short term support around 98.40 and a rising lower media line on the pitchfork in the chart. I am watching to see if either these lines provide support or if in fact price is going into a major correction. I am more likely in favor of the former than the latter.